Sunday, November 13, 2011

Did Ross Perot Prove That American Voters Can Actually Do Budget Deficit Math?

On main street, Wall Street, and the occupy camps alike, it seems that Americans are oblivious to the risks inherent in running up trillion dollar annual deficits. There seems to be an almost child like faith that investors and foreign governments will continue to buy up U.S debt. Time will tell how much longer the U.S. will be able to fund it's burgeoning debt with bonds and notes that only average about a 3% interest rate. Obviously, we can fund today's $14.9 trillion dollar debt. However, as even the Congressional Budget Office noted in a July 2010 brief, the U.S. is not immune to risk of a fiscal crisis caused by Federal debt.

Given the lack of concern from most U.S. voters about the growing debt, it is remarkable to recall that back in June, 1992, Ross Perot led the presidential popularity polls with support from 39% of respondents (versus 31% for Bush and 25% for Clinton). While part of Perot's appeal was his populist anti-establishment message, his core platform was the need for an end to U.S deficit spending. In hindsight, it seems almost hard to believe that one of his campaign infomercials drew 10.5 million viewers for a message that was loaded with economic statistics.

The U.S. debt crisis is far more severe in 2011 than it was in 1992. There should be a lesson for U.S politicians from the popularity gained by Ross Perot. His use of charts to explain the dangers of the growing U.S. debt made the deficit math easy to understand. And once U.S. voters understood the problem and the fact that Perot stood to address it, he gained widespread support from both conservatives and liberals. Given the incredible missteps of Perot's campaign, including dropping out of the race and then jumping back in, it seems shocking that he still ultimately received 19% of the vote on election day.

Solving the U.S. debt problem is going to be politically painful. Hopefully, the cause of fiscal conservatism will find another advocate that is as effective at garnering support for tough policy choices as Perot. Politicians should keep in mind that Perot proved that being honest with American voters about the debt crisis can be an effective campaign tactic.

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The U.S. economy is headed for a train wreck if we continue to run up trillion dollar deficits and pump millions of tons of CO2 into the atmosphere. The dual problems of the growing national debt and carbon emissions threaten the future sustainability of the U.S. economy.

Americans are by nature optimistic, but if we continue to keep our head in the sand in regard to these issues and continue on a business as usual path, the result will be an economic calamity.

The goal of this blog is to sound the alarm and suggest solutions before it is to late to save the U.S. economy from a bleak economic future.

This blog also reports on investment tactics that some traders are utilizing to provide protection in the event that we fail to turn things around and economic downturn spirals into a depression. However, the blog content is for informational purposes only and does not constitute financial advice. Author Randy Pickard is not a licensed financial professional.